The Federal Reserve: What You Need to Know

What is the Federal Reserve?

The Federal Reserve System (Fed) is the central bank of the United States. It is responsible for regulating the nation's monetary system and serving as the bank of last resort for the country's commercial banks. The Fed also plays a key role in setting interest rates and managing the financial system in general.

Who Leads the Federal Reserve?

The Fed is led by a Board of Governors, which consists of seven members. The members are appointed by the President of the United States and confirmed by the Senate. The Chairman of the Board of Governors is the most powerful member and serves as the chief executive officer of the Fed.

What are the Fed's Main Responsibilities?

The Fed has three main responsibilities: conducting monetary policy, supervising and regulating the financial system, and providing financial services to banks and other financial institutions.

Monetary Policy

The Fed's monetary policy is aimed at promoting maximum employment and price stability. The Fed uses a variety of tools to implement monetary policy, including open market operations, changes in the discount rate, and changes in reserve requirements.

Financial Supervision and Regulation

The Fed is responsible for supervising and regulating the financial system to ensure its safety and soundness. The Fed's financial supervision and regulation activities include examining banks, setting capital requirements, and enforcing consumer protection laws.

Financial Services

The Fed provides a variety of financial services to banks and other financial institutions. These services include providing loans to banks, clearing checks, and facilitating payments.

What is the Federal Open Market Committee?

The Federal Open Market Committee (FOMC) is a committee within the Fed that is responsible for setting interest rates. The FOMC meets eight times a year to make decisions about interest rates. The decisions of the FOMC are closely watched by financial markets and investors.

Who is Jerome Powell?

Jerome Powell is the current Chairman of the Board of Governors of the Fed. Powell was appointed by President Donald Trump in 2018. Powell is a former investment banker and has served on the Board of Governors of the Fed since 2012.